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Country Insights

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Creditors of over 95% of all household loans decided to sue the State of Hungary
HUNGARY - In Brief 26 Aug 2014
Fact: 79 out of the existing total of 400 domestic creditors are now suing the State of Hungary, fighting the assumption laid down in a special parliamentary act approved in July 2014 that all their previous unilateral amendments of loan contracts vis-a-vis households were unfair and thus illegal...

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War Aggravates Economic Problems
UKRAINE - Report 26 Aug 2014
Executive Summary Intensified fighting around Donetsk and Luhansk triggered a 12.1% y/y industrial output slump in July.The Luhansk oblast reported a 56% y/y decline in industrial production, while the Donetsk oblast’s output fell 28.5% y/y that month.In August, military forces intensified their ...

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Hurdle of Energy Reform Implementation
MEXICO - Report 26 Aug 2014
Executive Summary Now that the implementing laws that form the practical underpinning of the country’s energy reform have been signed into law, the new challenge will be to effectively implement them. The degree to which the energy reform proves successful in practice will be crucial for the futu...

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Growth Accelerates in 2Q14
MEXICO - Report 26 Aug 2014
Executive Summary During the second quarter of 2014 Mexico’s Gross Domestic Product reversed the slowdown observed since the beginning of 2013. Original series data from the National Statistics Office (Inegi) for the April through June period show that almost all components of GDP slowed their pa...

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MPC Preview: Thorny Dilemmas…
TURKEY - Report 26 Aug 2014
What will the CBRT/Monetary Policy Committee do tomorrow at its regular monthly meeting? If we are to go with the economics, the answer is relatively straightforward: stop the cuts now. The economic rationale for rate cuts has always been weak, and it is getting weaker by the day. True, growth se...

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President dissolves Parliament; early elections appointed for October 26
UKRAINE - In Brief 26 Aug 2014
Yesterday late at night President Petro Poroshenko dissolved the parliament. New elections have been appointed for October 26. The decision was in line with legislation since a month ago ruling parliament coalition stopped its activity. This step was widely expected in society since many MPs from...

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Employment and Indebtedness Frustrating Recovery of Credit
BRAZIL ECONOMICS - Report 25 Aug 2014
In an election year, the government is worried about the ongoing deceleration of the Brazilian economy. On August 28th, the IBGE will release the GDP figures for the second quarter of 2014, and besides possible contraction in relation to the first quarter, the numbers should show a sharp reductio...

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Political Insights: Week of August 25
BRAZIL POLITICS - Report 25 Aug 2014
The first presidential debate is scheduled for Tuesday, August 26.The three main candidates (Dilma Rousseff, Marina Silva and Aécio Neves) have confirmed they will participate. Three new voter intention polls will be released, the first polls since the beginning of free electoral advertising. On ...

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Gray Lists, Fiscal Weaknesses and Political Uncertainty: Martinelli’s Legacy and Varela’s Challenges
PANAMA - Report 25 Aug 2014
Executive Summary Panama will be on the list of non-compliant countries of three different agencies before the end of the year: GAFI, OCDE and IOSCO. The economic and financial impact of being on these lists is important for reputational reasons and for the possible negative effect on external fi...

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Fundamentals will Cushion Against Housing Collapse
CHINA - Report 22 Aug 2014
Executive Summary Fixed asset investment increased just 15.7% y/y in real terms in July, its slowest rise this year. Industrial output also dipped, rising 9% y/y, slightly less than in June. We expect the government to respond by increasing investment, given its healthy budgetary situation. We...

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New Test for the Repo Rate Hiking Cycle Rule
SOUTH AFRICA - Report 22 Aug 2014
Statistics South Africa (Stats SA) will publish the second quarter of 2014 gross domestic growth outcome on 26 August 2014. Following a 0.6 per cent contraction on a quarter-on-quarter seasonally adjusted and annualised basis in Q1 2014, we expect a positive (albeit pedestrian) growth rate in Q2 ...

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New Cabinet Includes a Weak Economic Hire
COLOMBIA - Report 22 Aug 2014
Executive Summary President Juan Manuel Santos’ second-term priorities are state reform, especially to eliminate a president’s ability to run for a second consecutive term; to raise tax collection by at least 2 pp of GDP; and to conclude the FARC peace negotiations. A deal on the latter should be...

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Red Blood Cells Needed
CHILE - Report 22 Aug 2014
Executive Summary The economy is anemic, and the bottom is definitely deeper than previously thought. Retailers have been left with excess stocks. Though construction permits are very dynamic, actual activity in the construction sector, and home sales, is less robust. Imports of capital goods ...

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Prof Davutoglu to succeed Erdogan
TURKEY - In Brief 21 Aug 2014
As I predicted, AKP’s top decision-making body convened to select current Foreign Affairs Minister (FAM) Prod Davutoglu as the candidate to replace outgoing Erdogan. Given Erdogan’s conflicting objectives and the limits enforced by the three-term rule, he is probably the best. Nevertheless, he is...

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Will GDP growth surprise on the upside?
PHILIPPINES - In Brief 21 Aug 2014
We agree with most analysts' expectations that 2Q14 GDP growth will exceed the 5.7% 1Q14 growth rate. It is after all difficult to ignore the surprisingly strong numbers indicating robust economic activity during the period, with even the agricultural sector posting higher gains. Oddly for us, th...